2005.10.11 - Daily Mail - Sanctuary Workers Are Out Of Their Ear

SANCTUARY WORKERS ARE OUT ON THEIR EAR

By James Ashton

MUSIC group Sanctuary is feeling the pinch, but its roster of star-studded artists are unlikely to have to tighten their designer belts.

The debt-laden firm, which manages soul diva Beyonce, Sir Elton John and young crooner James Blunt, is cutting twice as many costs as it promised the City.

Some 175 posts - one in four - will go to save £15m a year at a one-off cost of £8m.

But there will be no reduction in the singing stars' retinue of hangers-on. Most are paid for by concert promoters or the artists themselves.

Instead, Sanctuary (up 0.79p to 6.89p) is axing office staff and accountants in London, New York, Houston, Los Angeles and Berlin.

'It's a back to basics approach. They were in a growth phase, but now they are concentrating on existing artists and businesses,' said Paul Richards, at Numis Securities.

Sanctuary is trying to trade its way out of trouble after a shocking string of profit warnings this year.

Executive chairman Andy Taylor, a country and western fan, is confident. 'I believe we are well-placed to rapidly return to profitability going forward,' he said.

Taylor, a chartered accountant, discovered rock group Iron Maiden in a London pub in 1979. The act made Sanctuary the biggest independent record label in the world. But now it must draw in its horns after expanding too far too fast.

The group's book publishing arm has already been sold. Next to go is the music publishing division, which owns copyrights to compositions from artists such as former Guns n' Roses frontman Axl Rose.

It wants to concentrate on records, merchandising, managing artists and tour bookings.

Sanctuary owns reggae legend Bob Marley's back catalogue, has arranged concerts for Robbie Williams and manages the Manic Street Preachers and Morrissey.

However, losses for the financial year just ended could be £10m, and the £26m company is trading close to the limit of its £120m debt facility with the Bank of Scotland.

'I think there will still have to be a debt-for-equity swap at some stage,' said another analyst who declined to be named.

Shareholders including Big Brother creator John de Mol, who has a 19pc stake, are still supportive of Taylor, even though most are sitting on huge losses and takeover talks ended last month.

Larger rivals EMI and Warner Music - themselves tipped to merge soon - are believed to have taken a look at the group's books.

2005 Associated Newspapers. All rights reserved

Merck Mercuriadis responded to this and other reports in relations to Axl's publishing (mygnrforum, Oct. 14, 2005):

Merck Mercuriadis, CEO of Sanctuary Group and GNR's manager, responded to the published report that stated Sanctuary plans to sell the company's music publishing business. He said the GNR rights aren't for sale.

"Axl's catalogue would not be included," he said.